Member Article

R3 responds to November 2023 insolvency statistics

• Corporate insolvencies increased by 6.4% in November 2023 to a total of 2,466 compared to October’s total of 2,317, and increased by 21.4% compared to November 2022’s figure of 2,032.

o Corporate insolvencies increased by 47.1% from November 2021’s total of 1,676 and by 63.9% compared to pre-pandemic levels in November 2019 (1,505).

• Personal insolvencies decreased by 16.6% in November 2023 to a total of 8,247 compared to October’s total of 9,887, and decreased by 21.3% compared to November 2022’s figure of 10,478.

o Personal insolvencies decreased by 12.2% from November 2021’s total of 9,391 and decreased by 14.1% compared to pre-pandemic levels in November 2019 (9.606).

Eleanor Temple, chair of the UK’s insolvency and restructuring trade body R3 in Yorkshire, and a barrister at Kings Chambers in Leeds, comments on the publication of the November 2023 corporate and personal insolvency statistics for England and Wales:

“The monthly and year-on-year rise in corporate insolvency levels is driven by an increase in Creditors’ Voluntary Liquidations and Compulsory Liquidations, as more directors choose to close down their businesses while that choice is still theirs and more creditors are pursuing debts they are owed as they attempt to balance their own books.

“But the figures published today also take 2023’s corporate insolvency figures to the highest annual total since 2009. The fact that corporate insolvency numbers have reached a 14-year high is partly because of the covid hangover, which was a result of insolvency numbers being supressed by Government support measures, but also as a result of a relay of economic issues that have taken their toll on businesses.

“Since the spring of 2020, firms have had to contend with the pandemic, the end of the Government support measures, rising inflation, the cost of living crisis, and supply chain issues – with no time to draw breath or recover in between them.

“The past year has been especially tough. Costs have increased, people have been reluctant to spend money as they worry about paying for the basics, and high interest rates have made paying debts or securing funding incredibly difficult.

“This point of the year is a critical time for many businesses, and if it doesn’t deliver the rise in revenues many are hoping for, we could see insolvency numbers increase further next month.

“Given the timing and climate, it’s vital that directors and managers are alert to signs their business could be financially distressed and seek advice as soon as they present themselves. It’s a very hard conversation to have, but speaking up when your worries are new will give you more options for improving your situation and more time to take a decision about how you move forward.

“Turning to personal insolvencies, the monthly and yearly falls in numbers are due to a drop in the number of people entering a Bankruptcy or an Individual Voluntary Arrangement (IVA). However, the total numbers of Bankruptcies and Debt Relief Orders are higher for this year than for the whole of 2022, as are breathing space numbers, which suggest that the cost of living crisis is leading to more people turning to these procedures to help resolve their financial issues.

“There’s no denying that money worries have been at the front of many people’s minds for a long time now, and that isn’t likely to change in the future. People are still concerned about the cost of everyday expenses, the economy, and what the coming weeks and months will mean for their personal finances. They’re spending less on non-essentials and shopping around more as they worry about their bills, the cost of food and energy, and have one eye on paying for Christmas.

“While wages appear to have caught up with inflation, food prices seem to be continuing to rise and energy bills are set to increase further from January, which will mean household budgets will remain tight and finances are likely to remain strained as we head into the New Year.

“Our message to anyone who is worried about money is to seek advice from a qualified source as soon as possible. We know it isn’t easy, but having that conversation sooner rather than later will give you more potential solutions than if you’d waited until the situation became worse.

“Most R3 members will provide a free consultation to prospective clients so they can learn more about their circumstances and outline the options for improving them.”

This was posted in Bdaily's Members' News section by Emma Kilmurray .